Banking & Finance
Aktuelle Informationen des
Geschäftsbereichs Banking & Finance
News from the Banking & Finance practice
Dezember / December 2014
Original Newsletter(s) this article was published in: Commercial Litigation Update: October 2014
Banking & Finance
Aktuelle Informationen des
Fachbereichs Banking & Finance
News from the Banking & Finance practice
Juli / July 2014
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In October 2013, the Ontario Court of Appeal released its decisions in Nortel Networks Corporation (Re) and Northstar Aerospace Inc. (Re). These decisions throw yet another wrench into the gears for owners and past owners of contaminated properties and the directors and officers of corporations owning such properties.
Background to Nortel
The Supreme Court of Canada, in a decision that has implications for borrowers and lenders alike, particularly where pension funds are involved, has raised some new hurdles for the country’s banks and their business customers and, at the same time, has bolstered protection for lenders of last resort who finance insolvent companies.
The court’s decision in Sun Indalex Finance, LLC v. United Steelworkers, issued earlier this year, addresses critical questions in insolvency law regarding pension funds and DIP financing.
Government bonds were long considered a safe investment that offered the potential for high returns. However, after Argentina announced in 2002 that it would no longer service its bond debt and after Greece restructured its sovereign debt in March and December 2012, the question arises as to what investors can do to avoid the significant losses of capital (up to 70% in case of Argentina and over 80% in case of Greece) which almost always accompany sovereign debt restructurings.
The Federal Court of Justice (BGH) continued with its extensive interpretation of the rules for contesting transactions under insolvency law in a judgment dated 21 February 2013 (BGH IX ZR 32/12). In the case before the court, direct shareholder A in company T sold a claim under a loan to B at below par value. Following assignment, T repaid the loan to B at the nominal amount plus interest. Insolvency proceedings were opened around two months later in relation to T’s assets. The BGH’s decision covers three aspects:
A. Bill of the “Law on shielding credit institutions and financial groups against risks and planning their restructuring and winding-up”
In a recent case decided by the Federal Court of Justice (judgment of 15 November 2012 – IX ZR 169 / 11), an energy supplier had entered into a contract with a customer “which should also terminate without notice if the customer makes an application for insolvency or where preliminary insolvency proceedings are initiated or opened based on an application by a creditor”. When the customer was forced to declare insolvency, the energy supplier and the customer’s insolvency administrator entered into a new energy-supply contract at higher rates, subject to a review of the legal position.